A large activist investor has given an early vote of confidence to Malvern Bancorp's new chief executive, while backing off of demands that the Paoli, Pa., company sell itself.

The $578 million-asset company in September hired Anthony Weagley as president and CEO, filling a vacancy created when Ronald Anderson left in January. Last month, Malvern also disclosed that George Steinmetz had replaced F. Claire Hughes as chairman.

Weagley's hiring "is a very positive development for Malvern," Richard Lashley, a principal at PL Capital, wrote in a Nov. 6 letter to Steinmetz. "He is an accomplished CEO with the right skill set, attitude and experience to potentially transform Malvern from an underperforming thrift into a profitable community bank."

Lashley noted in the letter that he had recently met with Weagley, who previously served as chief executive of Center Bancorp in New Jersey, which merged with ConnectOne Bancorp earlier this year.

"We support his hiring and are willing to give him and the company a fair chance to perform," added Lashley, whose firm owns 9.7% of Malvern's stock. "As you know, that is a change from our previous position, in which we advocated for a sale of Malvern, as soon as possible."

Still, Lashley provided a long to-do list for Weagley, including a complete review of management and key employees, an analysis of financial accounting and credit review functions and a board assessment. PL Capital also wants Malvern to implement a stock ownership program for officers and directors and reduce its liability sensitivity.

The letter also suggested that Weagley wants to pursue more loan-production offices and micro-branches to add loans in a move that PL Capital said it would back. "We support the hiring of qualified and productive loan and relationship officers... to organically grow the bank," the letter said.

"Our support, however, is not unqualified, nor is our time line unlimited," the letter said. "The company, the board and the prior management team have made too many mistakes and misjudgments to get a free pass. Malvern's regulators certainly won't give the company or the bank a free pass, either."

Malvern is operating under a formal agreement with the Office of the Comptroller of the Currency, which was issued recently to replace a prior supervisory agreement.

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